Wednesday, November 02, 2011

Some small portfolio adjustments

A slightly late update.

On Monday I added a few additional shares in K Wah (HK:173) and HKR International (HK:480) to the portfolio. I paid HK$2.12 for K Wah and HK$3.25 for HKR.

K Wah is a mid tier Hong Kong property developer (some projects in the PRC as well). Sales of its current JV project Marinella have been going well even without allowing for current market conditions. The balance sheet is strong. The discount to NAV is large - even if there is a very large write down in asset values - but so are most property companies. IMHO the shares have been oversold.

HKR is a smaller property investor and developer (with a few other businesses). The companies track record of delivering growth and keeping up a respectable dividend is excellent. The discount to NAV is huge and, together with a strong balance sheet, provides considerable long term downside protection.

Right now it seems a bit counter intuitive to be buying property companies.

I'm trying to get into the habit of funding new acquisitions by selling some existing investments rather than repeatedly running down my cash position - once I eventually stop working I won't have much choice in the matter. The K Wah and HKR purchases were funded by selling part of my position in CMOC (HK:3993) for HK$3.88. CMOC has been a disappointing investment (to put it mildly). That said, I have no particular views on whether to hold or sell my remaining shares in CMOC.